Law:

Section:

Section 37(1) of the Income-tax Act, 1961 (Corresponding to section 10(2)(xv) of the Indian Income-tax Act, 1922) - Business expenditure - Allowability of - Assessment year 1946-47 - Assessee who was engaged in transport business purchased buses which owners had already sold to another transport operator - Assessee claimed deduction of litigation expenses under section 10(2)(xv) of 1922 Act which he incurred in connection with establishment of his title to buses purchased and for possession thereof in respect of which he obtained route permits - Whether in applying test to decide whether litigation expenditure incurred was of capital or revenue nature, ultimate result of litigation is irrelevant and it is also immaterial whether assessee claiming deduction figures as plaintiff or as defendant - Held, yes - Whether since suit was filed to maintain title to buses claimed to have been acquired as capital assets and it was not a case of outlay by assessee to cure a defective title, expenditure incurred in maintaining that claim of title to capital assets was not of a capital nature - Held, yes - Whether said expenditure was laid out solely and exclusively for purposes for assessee's business and was, therefore, allowable as business expenditure - Held, yes FACTS The 'G' permits and the route permits of five buses stood in the name of one 'B'. On 9-3-1944, 'B' executed an agreement in favour of another bus operator 'R' Ltd. 'B' claimed to be the sole and exclusive owner of those five buses. He transferred those five buses and the route rights to 'R' Ltd. The vendees obtained possession of the five buses the same day. Subsequently, 'B' resiled from the agreement. He followed this up with a letter to the Regional Transport Authority alleging that the agreement dated 9-3-1944, and the application for transfer of route rights had been obtained from him by fraud by 'R' Ltd. The Regional Transport Authority rejected the application for transfer of registry, and it suspended the permits as the registered permit holder 'B' was no longer in possession of the buses. 'R' were in actual possession of the buses after 9-3-1944, but in the absence of permits they could not ply…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492